“Carlos Tavares, CEO of Stellantis, was effectively fired yesterday”

“A particular point of friction lately had been Tavares's push for an aggressive EV strategy to meet the EU's tough emissions rules, while the board preferred a more flexible approach to sustain…”

The FT writes, Carlos Tavares, CEO of Stellantis, was effectively fired yesterday. The unanimous move by the board to part with the outspoken Tavares came after sharp differences emerged over electrification strategy and clashes over his short-term focus on restoring his reputation tarnished by a collapse in financial performance.

A particular point of friction lately had been Tavares's push for an aggressive EV strategy to meet the EU's tough emissions rules, while the board preferred a more flexible approach to sustain its plant operations and profit margins. Tavares's resignation was accepted at a board meeting on Sunday.

His abrupt exit leaves the world's fourth-largest carmaker scrambling to find a replacement, just as rivals including Volkswagen and Ford Motor Company grapple with tougher emissions rules, plant closures and job losses to address slow EV demand and competition with Chinese rivals.

Tavares unnerved Italian politicians with his confrontational approach and threats to shut down plants in the absence of an increase in EV subsidies. In the US, its most profitable market, he raised prices across its mass-market brands that left dealers saddled with inventories, causing tensions in the supply chain.

The 66-year-old had led the carmaker since 2021, when France's Peugeot owner PSA and Italy's Fiat Chrysler Automobiles merged. Through ruthless cost cuts, the self-styled “performance psychopath" initially boosted profit margins and built a solid balance sheet that allowed Stellantis to outperform its main European competitors with record profits last year.

However, despite his early successes and a push on EVs, sales slumped in Europe and the US, forcing the group to issue a steep profit warning in September. Shares have plummeted 47% this year, with the stock down nearly 10% on Monday.

Our Take 1: Execs like Tavares are everywhere these days. Rather than being up to the challenge of creating products that attract customers, they look to gov't policy to create captive customers for them. Demand for your uber-expensive inferior EVs not meeting expectations? No problem... just lobby gov't to mandate that people buy them. Voila! Problem solved.

Our Take 2: It's pretty apparent the tide is turning against the idea that EVs are either easy or smart replacements for traditional ICE vehicles. The message to execs everywhere in Tavares's dismissal should be clear—tread carefully when prioritizing inferior green products over incumbent technologies that have worked spectacularly for decades. Because you're very likely to get burned.